Exhibit 10.2


 


EMPLOYMENT AGREEMENT


 


THIS AGREEMENT is made and entered into as of the 17th day of June,
2004, by and between NEOPHARM, INC., a Delaware corporation (the “Company”) and
GREGORY P. YOUNG (“Executive”).


 


WITNESSETH:


 


WHEREAS, the Company desires to employ the Executive and the Executive
desires to accept such employment, upon the terms and conditions hereinafter
set forth;


 


NOW, THEREFORE, in consideration of the covenants and mutual agreements
set forth herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto do hereby
agree as follows:


 


1.                                       Employment.  Throughout the Term (as defined in
Section 2 below), the Company shall employ Executive as provided herein,
and Executive hereby accepts such employment. 
In accepting such employment, Executive states that, to the best of his
knowledge, (i) he is not now, and by accepting such employment, will not be,
under any restrictions in the performance of the duties contemplated under this
Agreement as a result of the provisions of any prior employment agreement or
non-compete or similar agreement to which Executive is or was a party; and (ii)
he will not make use of or reveal to anyone employed by or affiliated with the
Company any information that is of a confidential or proprietary nature which
he has obtained or which has been disclosed to him as a result of his position
with any entity with which he has been previously employed or affiliated.


 


2.                                       Term of
Employment.  The term of Executive’s
employment by the Company hereunder shall commence on July 13, 2004, or
such earlier date as Executive and the Company may mutually agree (the
“Effective Date”) and shall continue thereafter unless sooner terminated as a
result of Executive’s death or in accordance with the provisions of
Section 7 below (the “Term”).


 


3.                                       Duties.  Throughout the Term, and except as otherwise
expressly provided herein, Executive shall be employed by the Company as the
President and Chief Executive Officer (“CEO”) of the Company.  In such capacity, Executive shall devote his
full time to the performance of his duties as President and CEO of the Company
in accordance with the Company’s By-laws, this Agreement and the directions of
the Company’s Board of Directors.  In
addition, the Company shall promptly appoint Executive to the Board and
thereafter nominate Executive as a nominee for election to the Board and
solicit proxies for his election for so long as this Agreement is in effect.  Without limiting the generality of the
foregoing, throughout the Term, Executive shall faithfully perform his duties
as President and CEO at all times so as to promote the best interests of the
Company.


 

















 


4.                                       Compensation.


 


(a)                                  Base Salary.  For any and all services performed by Executive
under this Agreement during the Term, in whatever capacity, the Company shall
pay to Executive an annual salary of Three Hundred Twenty-Five Thousand Dollars
($325,000) per year (the “Base Salary”), less any and all applicable federal,
state and local payroll and withholding taxes. 
The Base Salary shall be paid in the same increments as the Company’s
normal payroll, but no less frequent than monthly and prorated, however, for
any period of less than a full month. 
The Salary will be reviewed annually by the Compensation Committee of
the Board of Directors and a determination shall be made at that time as to the
appropriateness of an increase, if any, thereto.


 


(b)                                 Sign-On Bonus.  If the Executive commences employment with
the Company on or before July 13, 2004, the Company will pay Executive a
sign-on bonus of Ninety-Seven Thousand Five Hundred Dollars ($97,500) (the
“Sign-on Bonus”) with such Sign-on Bonus, if earned, being paid in two
installments, with the first installment of Twenty-Five Thousand ($25,000)
being paid upon the Effective Date, with the balance of Seventy-Two Thousand
Five Hundred ($72,500) being paid in a second installment payment on
February 15, 2005.


 


(c)                                  Bonus.  In addition to the Base Salary, Executive
shall be eligible to receive from the Company an annual incentive compensation
bonus (the “Bonus”) based on a percentage of his Base Salary.  The Bonus, if any, shall be determined based
on the achievement by the Company of certain specific strategic plans and goals
(the “Performance Goals”) during the preceding calendar year (the “Measurement
Period”) as shall be determined by the Board in consultation with the
Executive.  The initial Performance
Goals will be established by the Board within ninety (90) days of Executive’s
employment hereunder.  Thereafter, the
Performance Goals for each Measurement Period shall be established as promptly
as possible in each such Measurement Period, with the expectation that the
Performance Goals be in place each year prior to distribution of the Company’s
annual proxy materials.  Following each
Measurement Period, the Compensation Committee of the Board shall review the
Performance Goals for the prior Measurement Period in light of the Company’s
actual performance during such Measurement Period as reflected on the Company’s
audited financial statements. 
Achievement of various levels of the Performance Goals shall result in
the following payments as a percentage of Salary:


 


	
  Level of Achievement

  	
   

  	
  Bonus as
  Percent of Salary

  	
   

  
	
  Below Threshold

  	
   

  	
  0

  	
  %

  
	
  Threshold Goal

  	
   

  	
  20-50

  	
  %

  
	
  Target Goal

  	
   

  	
  50

  	
  %

  
	
  Overachievement Goal

  	
   

  	
  50-80

  	
  %

  



 


Payment of each year’s Bonus, if any, shall
be made within thirty (30) days after the Company’s performance for the
Measurement Period is established on the basis of the Company’s audited
financial statements.  In addition, and
at its 


 


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sole discretion, the Board may award additional compensation to
Executive based on Executive’s contributions to the Company.  For the 2004 Measurement Period, the Bonus,
if any, shall be prorated to take into account the shortened Measurement
Period.


 


5.                                       Benefits and
Other Rights.  In consideration for
Executive’s performance under this Agreement, the Company shall provide to
Executive the following benefits:


 


(a)                                  The Company will
provide Executive with cash advances for or reimbursement of all reasonable
out-of-pocket business expenses incurred by Executive in connection with his
employment hereunder;  provided,
however, Executive adheres to any and all reasonable policies established by
the Company from time to time with respect to such reimbursements or advances,
including, but not limited to, a requirement that Executive submit supporting
evidence of any such expenses to the Company.


 


(b)                                 The Company will
provide Executive with a monthly car allowance in the amount of Six Hundred
Dollars ($600.00) subject to standard payroll withholding for taxes.


 


(c)                                  The Company will
reimburse Executive for the cost of financial and estate planning up to a
maximum of $3,000 per year.


 


(d)                                 The Company will
provide Executive and his family with the opportunity to receive group medical
coverage under the terms of the Company’s health insurance plan, but subject to
completion of normal waiting periods.  During
any such waiting period, the Company will pay, or reimburse Executive for, the
cost of COBRA coverage for Executive and his family under his prior health
plan.


 


(e)                                  During the Term the
Executive shall be entitled to four (4) weeks paid vacation, it being
understood and agreed that unused vacation shall not be carried over from one
year to the next.


 


(f)                                    During the Term
Executive shall be eligible to participate in the Company’s 401(k) program and
life insurance programs, if any, subject to satisfying any eligibility requirements
for said benefits.


 


6.                                       Options.


 


(a)                                  The Company shall
grant to Executive options pursuant to the Company’s 1998 Equity Incentive Plan
(the “Option Plan”), as amended, to purchase 250,000 shares of the Company’s
common stock (the “Initial Options”) at an option exercise price of 85% of the
Fair Market Value (as determined under the Option Plan) of the Company’s common
stock as of the Effective Date, which date shall be the date of grant of the
Initial Options for purposes of the Option Plan (the “Date of Grant”).  The Initial Options shall vest in equal
installments of 62,500 Initial Options per year on each of the first four
anniversaries of the Date of Grant.  The
Initial Options shall not be exercisable subsequent to the date ten (10)


 


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years after the Date of Grant. In all other respects the Initial
Options shall be governed by the terms and conditions of the Option Plan.


 


(b)                                 Contingent Options.  As additional consideration for Executive to
accept employment, and as an incentive to enhance the performance of the
Company, the Company will reserve an additional 350,000 options under the
Option Plan (the “Contingent Options”) for possible grant to Executive upon
satisfaction of the following conditions to grant:


 


(i)                                     If during the
Term, the closing stock price for the Company’s common stock as reported in the
Wall Street Journal, or if the Wall Street Journal shall not then be published,
such other national business paper as shall be selected by the Company, on the
National Association of Securities Dealers Inc.’s Nasdaq National Market, or,
if the Company’s common stock is not then traded on the Nasdaq National Market,
such other market which the Company may hereafter designate as the principal trading
market for the Company’s common stock (the “Trading Market”) is: (x) in excess
of $18.00 per share for ten (10) consecutive “Trading Days” (as used herein
Trading Days shall mean days when the Trading Market is open for business and
the common shares of the Company are actively traded), the Company will
promptly thereafter grant to Executive 50,000 additional options at an exercise
price equal to the Fair Market Value of the Company’s common stock at the date
of grant of such options, with such options vesting at the rate of 12,500
options per year on each of the next four anniversaries of the date of grant in
accordance with the terms of the Option Plan, (y) in excess of $25.00 per share
for ten (10) consecutive Trading Days, the Company will promptly grant to
Executive another 50,000 options at an exercise price equal to the Fair Market
Value of the Company’s common stock at the date of grant of such options, with
such options vesting at the rate of 12,500 options per year on each of the next
four anniversaries of the date of grant in accordance with the terms of the
Option Plan, and (z) in excess of $35.00 per share for ten (10) consecutive
Trading Days, the Company will promptly grant to Executive an additional
250,000 options at an exercise price equal to the Fair Market Value of the
Company’s common stock at the date of grant of such options, with none of such
250,000 options, however, vesting until the third anniversary of the date of
grant.


 


(ii)                                  All of the Contingent
Options, and the target stock prices for the grant of such Contingent Options
as set forth in § 6(b)(i) shall be adjusted, if necessary, to accurately
and equitably reflect any stock dividends, stock splits or other stock
adjustments that may be announced from time to time by the Company during the
Term.


 


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7.                                       Termination
of the Term.


 


(a)                                  The Company shall
have the right to terminate the Term under the following circumstances:


 


(i)                                     Executive shall
die;


 


(ii)                                  With or without
Cause, as herein defined, effective upon written notice to Executive by the
Company; or,


 


(iii)                               Upon or within one (1)
year following a Change of Control, as herein defined.


 


(b)                                 Executive  shall have the right to terminate the Term
under the following circumstances:


 


(i)                                     At any time upon
sixty (60) days prior written notice to the Company; or


 


(ii)                                  For Good Reason, as
herein defined, upon or within one (1) year following a Change of Control.


 


(c)                                  For purposes of this
Agreement, “Cause” shall mean:


 


(i)                                     Executive shall be
convicted of the commission of a felony or a crime involving dishonesty, fraud
or moral turpitude;


 


(ii)                                  Executive has engaged
in acts of fraud, embezzlement, theft or other dishonest acts against the
Company;


 


(iii)                               Executive commits an act
which negatively impacts the Company or its employees including, but not
limited to, engaging in competition with the Company, disclosing confidential
information or engaging in sexual harassment, discrimination or other human
rights-type violations;


 


(iv)                              Executive’s gross neglect
or willful misconduct in the discharge of his duties and responsibilities; or


 


(v)                                 Executive’s repeated
refusal to follow the lawful direction of the Board of Directors or supervising
officers.


 


(d)                                 For purposes of this
Agreement, “Change of Control” shall mean the occurrence of any of the
following:


 


(i)                                     The acquisition
(other than by a direct purchase of shares from the Company) by any “person,”
including a “syndication” or “group”, as those terms are used in
Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as
amended (other than any such person currently owning in


 


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excess of the following amount), of securities representing 20% or more
of the combined voting power of the Company’s then outstanding voting
securities, which is any security that ordinarily possesses the power to vote
in the election of the Board of Directors of a corporation without the
happening of any precondition or contingency;


 


(ii)           The Company is merged or consolidated with
another corporation and immediately after giving effect to the merger or
consolidation less than 80% of the outstanding voting securities of the
surviving or resulting entity are then beneficially owned in the aggregate by
(x) the stockholders of the Company immediately prior to such merger or
consolidation, or (y) if a record date has been set to determinate the
stockholders of the Company entitled to vote on such merger or consolidation,
the stockholders of the Company as of such record date;


 


(iii)          If at any time during a calendar year a
majority of the directors of the Company are not persons who were directors at
the beginning of the calendar year or are not persons who were nominated or
approved for election by a majority of directors who were directors at the
beginning of the year (or are deemed to have been in office as of such date
through the prior operation of this provision); or


 


(iv)          The Company transfers substantially all of
its assets to another corporation which is a less than 80% owned subsidiary of
the Company.


 


(e)                                  For purposes of this
Agreement, “Good Reason” shall mean the occurrence of any one or more of the
following events which continues uncured for a period of not less than thirty
(30) days following written notice given by the Executive to the Company within
fifteen (15) days following the occurrence of such event, unless the Executive
specifically agrees in writing that such event shall not be Good Reason:


 


(i)                                     Any material
breach of this Agreement by the Company;


 


(ii)                                  Any failure to
continue the Executive as an executive officer of the Company;


 


(iii)                               The requirement by the
Company that Executive perform his services hereunder primarily at a location
outside of the metropolitan Chicago, Illinois area; or


 


(iv)                              The reduction of the
Employee’s Base Salary below the amount set forth in Section 4(a) above
without the written consent of Executive.


 


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8.                                       Effect of
Expiration or Termination of the Term. 
Promptly following the termination of the Term, and except otherwise
expressly agreed to by the Company, Executive shall:


 


(a)                                  Immediately resign
from any and all other positions or committees which Executive holds or is a
member of with the Company or any subsidiary of the Company, including, but not
limited to, as an officer and director of the Company or any subsidiary of the
Company.


 


(b)                                 Provide the Company
with all reasonable assistance necessary to permit the Company to continue its
business operations without interruption and in a manner consistent with
reasonable business practices; provided, however, that such transition period
shall not exceed thirty (30) days after termination nor require more than
twenty (20) hours of Executive’s time per week and Executive shall be promptly
reimbursed for all out-of-pocket expenses.


 


(c)                                  Deliver to the
Company possession of any and all property owned or leased by the Company which
may then be in Executive’s possession or under his control, including, without
limitation, any and all such keys, credit cards, automobiles, equipment,
supplies, books, records, files, computer equipment, computer software and
other such tangible and intangible property of any description whatsoever.  If, following the expiration or termination
of the Term, Executive shall receive any mail addressed to the Company, then
Executive shall immediately deliver such mail, unopened and in its original
envelope or package, to the Company;


 


(d)                                 Other than as
specifically provided in this Section 8, upon a termination of employment
all other benefits and/or entitlements to participate in programs or benefits,
if any, will cease as of the effective date of such termination


 


(e)                                  Upon termination of
the Executive pursuant to § 7(a)(ii), without Cause, following the six (6)
month anniversary of the Effective Date, the Company shall provide Executive
with Base Salary continuance, subject to § 8(h), for twelve (12) months (a
“Salary Continuance”) at the rate in effect immediately prior to termination.


 


(f)                                    Upon termination of
Executive pursuant to § 7(a)(i) and § 7(a)(ii) with Cause or
§ 7(b)(i), the Company shall pay Executive or Executive’s estate all Base
Salary accrued, but unpaid, as of the date of such termination.


 


(g)                                 Upon termination of
Executive pursuant to §7(a)(iii) or § 7(b)(ii), the Company shall:  (i) provide Executive with Salary
Continuance for twelve (12) months at the rate in effect immediately prior to
termination, plus (ii) a lump sum payment equal to one hundred percent (100%)
of the Bonus, if any, paid to Executive for the calendar year immediately
preceding such termination, plus (iii) all of Executive’s then unvested
options, if any, previously issued pursuant to the Option Plan shall
immediately vest and be exercisable as provided in the Option Plan.


 


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(h)                                 In the event that
Executive shall be entitled to receive a Salary Continuance pursuant to
§ 8(e), such Salary Continuance shall continue only until such time as
Executive shall have accepted another full-time position.  In addition, in the event that Executive
shall perform consulting or other services during the period he is receiving
any Salary Continuance for which he shall receive compensation, all
compensation shall be reported to the Company and shall be offset against any
remaining Salary Continuance payments. 
Failure of Executive to promptly report the receipt of any compensation
from a third party or the acceptance of a new position shall entitle the
Company to terminate all remaining Salary Continuance and to seek restitution
for any payments made to Executive subsequent to such job acceptance or
compensation receipt.


 


(i)                                     Any Salary
Continuance payments shall be made in accordance with the usual payroll
practices which were applicable prior to termination. Except as otherwise
specifically set forth herein, any and all payments made pursuant to this
Agreement shall be net of any and all applicable federal, state and local
payroll and withholding taxes.


 


(j)                                     If the Company or
the Company’s accountants determine that the payments called for under
Section 8(g) of this Agreement either alone or in conjunction with any
other payments or benefits made available to the Executive by the Company will
result in the Executive being subject to an excise tax (“Excise Tax”) under
Section 4999 of the Internal Revenue Code of 1986, as amended (the
“Code”), or if an Excise Tax is assessed against Executive as a result of such
payments or other benefits, the Company shall make a Gross-Up Payment (as defined
below) to or on behalf of Executive as and when such determination(s) and
assessments(s), as appropriate, are made, subject to the conditions of this
subsection (j).  A “Gross-Up
Payment” shall mean a payment to or on behalf of Executive that shall be
sufficient to pay (i) any Excise Tax in full, (ii) any federal, state and local
income tax and Social Security or other employment tax on the payment made to
pay such Excise Tax as well as any additional Excise Tax on the Gross-Up
Payment, and (iii) any interest or penalties assessed by the Internal Revenue
Service on Executive if such interest or penalties are attributable to the
Company’s failure to comply with its obligations under this subsection (j)
or applicable law.  Any determination
under this subsection (j) by the Company or the Company’s accountants
shall be made in accordance with Section 280G of the Code, any applicable
related regulations (whether proposed, temporary or final), any related
Internal Revenue Service rulings and any related case law, and shall assume
that Executive shall pay Federal income taxes at the highest marginal rate in
effect for the year in which the Gross-Up Payment is made and state and local
income taxes at the highest marginal rate in effect in the state of Executive’s
residence for such year.  Executive
shall take such action (other than waiving Executive’s right to any payments or
benefits) as the Company reasonably requests under the circumstances to
mitigate or challenge such tax.  If the
Company reasonably requests that Executive take action to mitigate or
challenge, or to mitigate and challenge, any such tax or assessment and
Executive complies with such request, the Company shall provide Executive with
such information and such expert advice and assistance from the Company’s
accountants, lawyers and other advisors as Executive may reasonably request and
shall pay for all expenses


 


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incurred in effecting such compliance and any related fines, penalties,
interest and other assessments.  Subject
to the provisions of this subsection (j), all determinations required to
be made under this subsection (j), including whether and when a Gross-Up
Payment is required and the amount of such Gross-Up Payment and the assumptions
to be utilized in arriving at such determination, shall be made, after
receiving the prior approval of the Audit Committee of the Board of Directors,
by the public accounting firm that is retained by the Company as of the date
immediately prior to the Change of Control (the “Accounting Firm”) which shall
provide detailed supporting calculations both to the Company and Executive
within thirty (30) business days of receipt of notice from the Company or
Executive that there has been a payment that could trigger a Gross-Up Payment,
or such earlier time as is requested by the Company (collectively the
“Determination”).  In the event that the
Accounting Firm is serving as accountant or auditor for the individual, entity
or group effecting the Change of Control, or in the event that the Audit
Committee of the Board of Directors shall not approve of the accountants’
performing such services, Executive may appoint another nationally recognized
public accounting firm to make the determinations required hereunder (which
accounting firm shall then be referred to as the Accounting Firm
hereunder).  All fees and expenses of
the Accounting Firm shall be borne solely by the Company and the Company shall
enter into any agreement requested by the Accounting Firm in connection with
the performance of the services hereunder. 
The Gross-Up Payment under this subsection (j) with respect to any
payments shall be made no later than sixty (60) days following such payments.  If the Accounting Firm determines that no
Excise Tax is payable by Executive, it shall furnish Executive with a written
opinion to such effect, and to the effect that failure to report the Excise
Tax, if any, on Executive’s applicable federal income tax return will not
result in the imposition of a negligence or similar penalty.  The Determination by the Accounting Firm
shall be binding upon the Company and Executive.  As a result of the uncertainty in the application of
Section 4999 of the Code at the time of the Determination, it is possible
that the Gross-Up Payments which will not have been made by the Company should
have been made (“Underpayment”) or Gross-Up Payments are made by the Company
which should not have been made (“Overpayment”), consistent with the
calculations required to be made hereunder. 
In the event that Executive thereafter is required to make payment of
any additional Excise Tax, the Accounting Firm shall determine the amount of
the Underpayment that has occurred and any such Underpayment (together with
interest at the rate provided in Section 1274(b)(2)(B) of the Code) shall
be promptly paid by the Company to or for the benefit of Executive.  In the event the amount of the Gross-Up
Payment exceeds the amount necessary to reimburse Executive for his Excise Tax
as herein set forth, the Accounting Firm shall determine the amount of the
Overpayment that has been made and any such Overpayment (together with interest
at the rate provided in Section 1274(b)(2) of the Code) shall be promptly
paid by Executive to or for the benefit of the Company.  Executive shall cooperate, to the extent
Executive’s expenses are reimbursed by the Company, with any reasonable
requests by the Company in connection with any contests or disputes with the
Internal Revenue Service in connection with the Excise Tax.


 


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9.                                       Restrictive
Covenants for Executive.  Executive
hereby covenants and agrees with the Company that for so long as Executive is
employed by the Company and for a period (the “Restricted Period”) of twelve
(12) months after the termination of such employment for any reason, Executive
shall not, without the prior written consent of the Company, which consent
shall be within the sole and exclusive discretion of the Company, either
directly or indirectly, on his own account or as an executive, consultant,
agent, partner, joint venturer, owner, officer, director or shareholder of any
other person, firm, corporation, partnership, limited liability company or
other entity:


 


(a)                                  Perform services for
the Competing Business, as hereinafter defined, that are substantially similar
in whole or in part to those that he performed for the Company in his role as
President and CEO, including specifically, but not limited to, the research,
development, sale or marketing of drug or non-drug products or the management
of individuals involved in the research, development, sale or marketing of drug
or non-drug products.  For purposes of
this covenant, the term “Competing Business” shall mean any entity engaged in
the research, development, marketing or sale of drug and nondrug products which
are competitive with:  (1) those
products being marketed by the Company at the time of Executive’s termination;
or (2) those products that Executive was aware were under research and
development by the Company and expected to be marketed within four years of
Executive’s termination.  This covenant
shall apply only within the “Territory” which is defined as the fifty states of
the United States.  Executive recognizes
and agrees that in capacity of President and CEO, his duties extend throughout
the entire service area of the Company which includes, at a minimum, the fifty
states of the United States and that, because of the executive nature of
Executive’s position with the Company, in order to afford the Company
protection from unfair competition by the Executive following his termination
of employment, this covenant must extend throughout the stated Territory.  Executive further acknowledges that this
covenant does not prohibit him from engaging in his entire trade or business
but only a very limited segment of the pharmaceuticals industry;


 


(b)                                 Solicit any current
supplier, customer, employee, or client of the Company with whom Executive
dealt, or with whom anyone in Executive’s direct chain of command dealt, on
behalf of the Company within the year preceding Executive’s termination of
employment, for the purpose of researching, developing or purchasing, selling
or marketing drug or non-drug products, which are competitive with:  (1) those products being marketed by the
Company at the time of Executive’s termination; or (2) those products that
Executive was aware were under development by the Company and expected to be
marketed within four years of Executive’s termination;


 


(c)                                  All ideas,
inventions, trademarks, and other developments or improvements conceived or
developed by the Executive, alone or with others, during the term of this
Agreement, whether or not during working hours that are within the scope of the
Company’s business operations, or that relate to any Company work or projects,
shall be conclusively presumed to have been created for or on behalf of


 


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the Company as part of the Executive’s services to the Company
(“Development”).  Executive shall disclose
promptly to Company any and all such Developments.  Such Developments are the exclusive property of the Company
without the payment of consideration therefore, and the Executive hereby
transfers, assigns and conveys all of the Executive’s right, title and interest
in any such Developments to the Company and agrees to execute and deliver any
documents that the Company deems necessary to effect such transfer on the
demand of the Company.  The Executive
agrees to assist the Company, at its expense, to obtain patents on any such
patentable Developments, and agrees to execute all documents necessary to
obtain such patents in the name of the Company.  This Agreement does not apply to any invention for which no equipment,
supplies, facility or trade secret information of the Company was used and
which was developed entirely on the Executive’s own time unless:  (1) the invention relates (a) to the
business of the Company or (b) to the Company’s actual demonstratively anticipated
research and development, or (2) the invention results from any work performed
by the Executive for the Company.


 


(d)                                 Executive recognizes
and understands that Executive’s duties at the Company may include the
preparation of materials, including written or graphic materials and other Developments,
and that any such materials conceived or written by Executive shall be deemed a
“work made for hire” as defined and used in the Federal Copyright Act, 17
U.S.C. § 101.  In the event of
publication of such materials, Executive understands that since such work is
“work made for hire,” the Company shall solely retain and own all rights in
such materials, including any right of copyright.


 


10.                                 Confidentiality.  The Executive acknowledges that during the
period of his employment by the Company, and in his performance of services
hereunder, he will be placed in a relationship of trust and confidence
regarding the Company and its affairs. 
In the course of and due to that relationship he will have contact with
the Company’s customers, suppliers, affiliates, and distributors and their
personnel.  In the course of the
aforesaid relationship, he will have access to and will acquire confidential
information relating to the business and operations of the Company, including,
without limitation, information relating to processes, plans and methods of
operation of the Company.  The Executive
acknowledges that any such information that is not a trade secret, nonetheless
constitutes confidential information as between himself and the Company, that
the disclosure thereof (or of any information which he knows relates to
confidential, trade, or other secret aspects of the Company’s business) would
cause substantial loss to the goodwill of the Company, and will continue to be
made known to Executive only because of the position of trust and confidence
which he will continue to occupy hereunder. 
In view of the foregoing, and in consideration of the covenants and
premises of this Agreement, the Executive agrees that he will not, at any time
during the term of his employment, and for a period of twelve months
thereafter, disclose to any person, firm or company any trade secrets or
confidential information or such ideas which he may have acquired or developed
or may acquire or develop relating to the business of the Company while serving
the Company as an executive.


 


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11.                                 Remedies.


 


(a)                                  The covenants of
Executive set forth in Sections 9 and 10 are separate and independent covenants
for which valuable consideration has been paid, the receipt, adequacy and
sufficiency of which are acknowledged by Executive, and have also been made by
Executive to induce the Company to enter into this Agreement.  Each of the aforesaid covenants may be availed
of, or relied upon, by the Company in any court of competent jurisdiction, and
shall form the basis of injunctive relief and damages including expenses of
litigation (including, but not limited to, reasonable attorney’s fees upon
trial and appeal) suffered by the Company arising out of any breach of the
aforesaid covenants by Executive.  The
covenants of Executive set forth in this Agreement are cumulative to each other
and to all other covenants of Executive in favor of the Company contained in
this Agreement and shall survive the termination of this Agreement for the
purposes intended.


 


(b)                                 Each of the covenants
contained in Sections 9 and 10 above shall be construed as agreements which are
independent of any other provision of this Agreement, and the existence of any
claim or cause of action by any party hereto against any other party hereto, of
whatever nature, shall not constitute a defense to the enforcement of such
covenants.  If any of such covenants
shall be deemed unenforceable by virtue of its scope in terms of geographical
area, length of time or otherwise, but may be made enforceable by the
imposition of limitations thereon, Executive agrees that the same shall be
enforceable to the fullest extent permissible under the laws and public
policies of the jurisdiction in which enforcement is sought.  The parties hereto hereby authorize any
court of competent jurisdiction to modify or reduce the scope of such covenants
to the extent necessary to make such covenants enforceable.


 


(c)                                  In the event that
Executive believes that the Company is in violation of a material obligation
owed to Executive under this Agreement, and the Executive has given notice of
such violation to the Company requesting that the Company cure such violation,
and within twenty (20) business days the Company has not undertaken steps to
cure such violation or to provide information to Executive demonstrating that
the Company is not in violation of the Agreement, and as a result of such
failure to cure or dispute such violation, the Executive terminates the
Agreement in accordance with Section 7(b), Executive shall not be barred
from seeking employment with a competitor notwithstanding the restriction of
Section 9(a); provided, however, that all other restrictions contained in
this Agreement, including, but not limited to, the covenants in
Section 9(a) and in Section 10, shall remain in full force and
effect.


 


12.                                 Enforcement Costs.  If any legal action or other proceeding is
brought for the enforcement of this Agreement, or because of an alleged
dispute, breach, default or misrepresentation in connection with any provisions
of this Agreement, the successful or prevailing party or parties shall be
entitled to recover reasonable attorney’s fees, court costs and all expenses
even if not taxable as court costs (including, without limitation, all such
fees, costs and expenses incident to appeal and other post-judgment
proceedings),


 


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incurred in that action or proceeding, in addition to any other relief
to which such party or parties may be entitled.  Attorney’s fees shall include, without limitation, paralegal
fees, investigative fees, administrative costs, sales and use taxes and all
other charges billed by the attorney to the prevailing party.


 


13.                                 Indemnification.  The Company covenants and agrees that, to
the extent permitted by applicable law, it will indemnify and hold Executive
harmless from any and all liability, loss, damage, cost and expense (including
reasonable attorneys’ fees) which Executive may incur, suffer or be required to
pay and which result from or arise in connection with any act by the Company,
or on the Company’s behalf by any of the Company’s officers, directors,
employees, consultants, representatives or agents, which act occurred prior to
the Effective Date and in which Executive did not, directly or indirectly,
participate.


 


14.                                 Notices.  Any and all notices necessary or desirable
to be served hereunder shall be in writing and shall be


 


(a)                                  personally delivered,
or


 


(b)                                 sent by certified
mail, postage prepaid, return receipt requested, or guaranteed overnight
delivery by a nationally recognized express delivery company, in each case
addressed to the intended recipient at the address set forth below.


 


(c)                                  For notices sent to
the Company:


 


NeoPharm, Inc.


150 Field Drive, Suite 195


Lake Forest, Illinois 60045


 


Telephone No.: (847) 295-8678


Facsimile No.: (847) 295-8654


 


(d)                                 For
notices sent to Executive:


 


Mr. Gregory P. Young


 


 


 


Either party hereto may amend the addresses for notices to such party
hereunder by delivery of a written notice thereof served upon the other party
hereto as provided herein.  Any notice
sent by certified mail as provided above shall be deemed delivered on the third
(3rd) business day next following the postmark date which it bears.


 


15.                                 Entire Agreement.  This Agreement sets forth the entire
agreement of the parties hereto with respect to the subject matter hereof, and
all prior negotiations, agreements and understandings are merged herein.  This Agreement may not be modified or
revised except pursuant to a written instrument signed by the party against
whom enforcement is sought.


 


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16.                                 Severability.  The invalidity or unenforceability of any
provision hereof shall not affect the enforceability of any other provision
hereof, and except as otherwise provided in Section 11 above, any such
invalid or unenforceable provision shall be severed from this Agreement.


 


17.                                 Waiver. Failure
to insist upon strict compliance with any of the terms or conditions hereof
shall not be deemed a waiver or such term or condition, and the waiver or
relinquishment of any right or remedy hereunder at any one or more times shall
not be deemed a waiver or relinquishment of such right or remedy at any other
time or times.


 


18.                                 Governing Law.  This Agreement and the rights and
obligations of the parties hereto shall be governed by and construed in
accordance with the laws of the State of Illinois, without regard to its
conflicts of laws provisions.  Each
party hereto hereby (a) agrees that any litigation which may be initiated with
respect to this Agreement or to enforce rights granted hereunder shall be
initiated in a court located in Cook County, Illinois and (b) consents to
personal jurisdiction of such courts for such purpose.


 


19.                                 Benefit and
Assignability. This Agreement shall inure to the benefit of and be binding
upon the Company and its successors and assigns.  The rights and obligations of Executive hereunder are personal to
him, and are not subject to voluntary or involuntary alienation, transfer,
delegation or assignment.


 


[SIGNATURE PAGE FOLLOWS]


 


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IN WITNESS WHEREOF, the parties hereto have executed this Employment
Agreement as of the day and year first above written.


 


	
   

  	
  NEOPHARM, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  s/ Erick E. Hanson

  	
   

  
	
   

  	
  Its:

  	
  Chairman of the Corp. Gov. Committe

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  EXECUTIVE:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  s/ Gregory P. Young

  	
   

  
	
   

  	
  GREGORY P. YOUNG

  
					



 


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